DEUTSCHE BANK BREACHED CREDIT DEFAULT SWAP AGREEMENTS.
The First Department, in a decision too detailed to fairly summarize here, determined the defendant Deutsche Bank breached credit default swap agreements with plaintiff Good Hill Master Fund. Good Hill was found to have acted in good faith and in a commercially reasonable manner in negotiating the price of the notes at issue. In addition Supreme Court did not abuse its discretion in prohibiting expert testimony offered by Deutsche Bank because interpretation of the contracts was within the ken of the trial judge:
We find no basis to disturb the court’s determination that Deutsche Bank breached the credit default swap agreements at issue here … . As the trial court found in awarding judgment in Good Hill’s favor, Good Hill negotiated at arm’s length with Bank of America to sell six tranches of notes the Bank had previously sold Good Hill at $.29 on the dollar, so that the Bank of America could unwind and terminate a securitization in the then-declining mortgage market. Bank of America’s resulting writedown of the B6 notes would trigger a negative credit event under the swap agreements. As a result, Good Hill negotiated with Bank of America to forgive only 17% of the principal amount, resulting in a smaller payout to Deutsche Bank under the swap agreements, as opposed to forgiving principal of 71% across the board on all the tranches of notes based on the $.29 purchase price. Bank of America was free to accept or reject that 83% allocation and had rejected several prior proposals from Good Hill that would have resulted in no payment or an even smaller payment to Deutsche Bank. Good Hill Master Fund L.P. v Deutsche Bank AG, 2017 NY Slip Op 00428, 1st Dept 1-24-17
SECURITIES (DEUTSCHE BANK BREACHED CREDIT DEFAULT SWAP AGREEMENTS)/RESIDENTIAL MORTGAGE BACKED SECURITIES (CREDIT DEFAULT SWAP AGREEMENT, DEUTSCHE BANK BREACHED CREDIT DEFAULT SWAP AGREEMENTS)/CREDIT DEFAULT SWAP AGREEMENTS (DEUTXCHE BANK BREACHED CREDIT DEFAULT SWAP AGREEMENTS)/CONTRACT LAW (CREDIT DEFAULT SWAP AGREEMENT, DEUTSCHE BANK BREACHED CREDIT DEFAULT SWAP AGREEMENTS)/EVIDENCE (CONTRACT LAW, EXPERT TESTIMONY NOT NECESSARY TO INTERPRET CREDIT DEFAULT SWAP AGREEMENT)/EXPERT OPINION (CONTRACT LAW, EXPERT TESTIMONY NOT NECESSARY TO INTERPRET CREDIT DEFAULT SWAP AGREEMENT)